Railroad shipping: AAR April volumes are mixed year over year

Jeff Berman, Group News Editor -- Logistics Management, 5/8/2008

WASHINGTON— Carload freight and intermodal volume totals for the month of April were in line with previous months, due in large part to a troubled economy which continues to hinder all forms of freight transportation, according to data released by the Association of American Railroads earlier today.

The AAR reported that U.S. railroads originated 1,668,255 carloads of freight in April, which was up 0.9 percent—or 14,883 carloads—from April 2007. And intermodal volume, which the AAR said is comprised of trailers and containers on flat cars and is not part of carload figures, was down 2.1 percent—or 24,323 trailers or containers—coming in at 1,117,511 units.

This unsteady performance portends a “more of the same” type of momentum, with the economy in recession, rising energy costs, and a declining U.S.dollar, according to several prominent economists.

In an interview with LM earlier today, AAR Director of Editorial Services Tom White likened the current situation—regarding railroad volumes to “a broken record” for the types of carloads that have been showing strength and the commodities that are consistently weaker.

“We continue to see weakness in the construction industry, which is shown in lumber & wood products data (down 20.1 percent year-to-date at 66,927 carloads),” said White. “There is also continued weakness in the automotive industry (down 12.4 percent year-to-date at 320,817 carloads).”

On the positive side, White pointed out that strength in coal (up 4.6 percent year-to-date at 2,575,574 loadings) and grain (up 18.2 percent at 452,636) is healthy so far this year.

He added that to a degree the weakness of the U.S. dollar is likely helping the grain and coal data, because indications suggest that exports for both commodities are up for the year.    

The decline of intermodal? Although intermodal data had been largely impressive prior to the economic slowdown, which began in late 2006, its current decline has more to do with weakness of the U.S. dollar more than anything else, noted White.

“As you had exports increase, you had imports decrease, because of the fact that the dollar is not as strong as it was before,” said White. “It is the opposite side of the increase of the other commodities now. Also, there is more capacity out there now on the trucking side of things so truckers might want to run some more volume on their own rather than put it on rail.”

Over the first four months of the year, the AAR said that total U.S. rail carloads were up 61,639 carloads—or 1.1 percent—to 5,841,221 carloads. And intermodal traffic, which is not included in carload figures, was down 144,267 trailers and containers—or 3.5 percent—to3,936,606 units. Total volume for the first four months of 2008 was estimated at 604.4 billion ton-miles, which was up 2.3 percent over the same timeframe in 2007.